The Canary in the Coal Mine

When I talk to retirees and soon to be retirees, they have two major concerns. The first concern is running out of money during retirement. The fact is, we are living longer. Life expectancy has created a new risk in retirement; living too long. 

Setting aside anxieties about the ‘quality’ of living longer, this has become a true concern. And it should be. Since Social Security benefits are funded to only 77% after 2031, and most people relying on the stock market to fund their retirement, the vast majority of people possess some type of long term anxiety.  Many people trundle along, listening to financial shows, or advisers deeply schooled in the mantra that ‘the stock market is always up’.

I contend; for WHOM is it always up? In the last 12 years we have seen massive declines, followed by periods of stagnation, followed by market rallies that almost getting  the average investor back to top dead center. Then what? Another crash. Then another long period of recovery and stagnation. 

When interviewed about his company’s performance during the crash of 2007-2009, the chief executive of a major financial planning company said this: “the company made money. Our Advisors made money. Two out the three ain’t bad.”

In February the market lost over 800 points in a few days. 

The reason for that is this. For 4 years the Fed has been pumping 87 BILLION a month in to the stock market. The new Fed Chief, Yellen testified that she was going to curtail this program. The market fell those 800 points. A day or so later she did the political version of ‘Just Kidding’. The market resumed its current upward course.

Now I’m no psychic. That remarks by the Fed Chief and the subsequent selloff was a canary in the coal mine for anyone considering what to do with their retirement funds. 

Fortunately my clients don’t have to worry. Their retirement funds are secure. Sing on Canary, sing on.